Lending exemption will benefit first-time buyers

The Reserve Bank believes its decision to exempt loans to build new houses from its lending restrictions will benefit first-home buyers more than investors.

That's despite the purpose of the exemption being to ensure the restrictions don't impede the building of new houses, rather than to help first-home buyers.

Since 1 October, only 10% of banks' mortgage lending is to customers with a deposit of less than 20%. The exemption for mortgages which finance the building of new houses will be backdated to 1 October.

Reserve Bank deputy governor Grant Spencer said the exemption could mean the construction of up to 200 houses a month which would not otherwise be built.

The bank believed low-deposit lending was behind up to 12% of building activity, or about 200 of the 1700 building consents issued each months.